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Cost Of Money
Test Description: WISE test questions
Instructions: Answer all questions to get your test result.
1) To determine the time value of money of depositing $100 in a savings account, a person needs to know the interest rate and
A
the rate of inflation
B
whether the account is FDIC protected
C
whether the bank offers overdraft protection
D
her total income
2) Which type of financial institution usually pays the highest rate of interest on a savings account balances?
A
commercial banks
B
savings and loan associations
C
investment firm money market accounts
D
credit unions
3) Which investment would you choose today if you believe interest rates will go up?
A
Short-term savings instruments
B
Long-term bonds
C
Stocks
D
Variable-rate loans
4) Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement?
A
Truth in Lending Act
B
Fair Debt Collection Practices Act
C
Fair Credit Reporting Act
D
Equal Credit Opportunity Act
5) Why might rising interest rates depress stock prices:
A
rising interest rates can result in lower business profits
B
stock investors are luredaway from interest-paying investments to stocks
C
rising interest rates can result in higher business profits
D
rising interest rates usually means the economy has less
6) The Rule of 72 is an easy way to
A
calculate how fast your savings will double in value at given interest rates
B
calculate how much tax you will owe on the interest earned
C
calcualte the length of time it takes to pay off a credit balance
D
approximate your savings balance each year
7) The information that a lender must disclose to consumers applying for a cash loan is
A
the annual percentage rate (APR) and/or the finance charge
B
the tax obligations
C
full dollar amount being paid back on the loan over its life
D
the formula for compunded interest
8) Who benefits the most from inflation?
A
lenders
B
the government
C
persons on fixed incomes
D
long-term fixed rate borrowers
9) A person is convinced that a lending institution is charging too much interest on a loan. This person whould be aware that
A
lending institutions all have their rates of interest set by the SEC
B
the Federal Trade Commission has laws against intimidating borrowers
C
interset rates depend entirely on the borrower's ability to pay back the loan
D
there are state usury laws.
10) Lamar believes that interst rates are going to fall in the near future and remain low for a considerable period of time. She should invest in
A
a long-term, fixed rate certificate of deposit
B
a variable rate of certificate of deposit
C
nothing, she should put her money under the mattress
D
a short-term, fixed rate certificate of deposit
*select an answer for all questions
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